State to save HBOS and RBS

BiggaThanBen

THE government will tomorrow (Monday) launch the biggest rescue of Britain’s high-street banks when the UK’s four biggest institutions ask for a £35 billion financial lifeline.
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The British bank rescue could leave the government owning 70% of HBOS and 50% of RBS.
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The scale of the fundraising could lead to trading at the London stock market being suspended.
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http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4926316.ece

Heyman_2

Crikey.

How long before the money runs out?

fc123

Heyman wrote: »

Crikey.

How long before the money runs out?

I'm really not understanding where all this 'money' is coming from.
The Times had a chart of the sums spent on NHS etc and they suddenly looked quite small compared to the bailout figures of 500 billion being talked about.
I understand the UK will go into debt (to IMF???) and we will have to pay it back, in the future, through taxes.....but, as a layperson, I don't see how we can.
But where does The IMF get £££ from.
I think my problem is I visualise pound notes when I read the sums, and that's wrong.

baby_boomer

As I posted on 7th October.

baby_boomer wrote: »

An investment banker told me on Sunday that the rumour in the City was that RBS could be suspended on Monday.

It looks like the rumour was right, but one week out.

I'm pleased that the Lloyds merger may not go ahead. At the time said I couldn't understand how Lloyds could be strong enough to absorb a much larger bank which had capital and solvency difficulties. It didn't look a good idea to weaken one of the few strongholds left.

baby_boomer

The key phrase for house prices from the article:

"Banking source say that the combined loss of capital of the banks as a result of the credit crisis was £150bn but some of that has already been made up by earlier capital raising exercises and some will not be needed because the banks will be more constrained in their lending.

Buy-to-let landlords should hold on tight for the ride!

The other key comment, from an economist who preferred anonymity, was:

"This is the biggest risk of [sic] the UK's balance sheet ever undertaken. No-one knows the extent of the toxic assets these banks are exposed to."

Amazing. Even at this stage of the crisis, the banks can't quantify their own risk. Which is the first duty of banking!

amcluesent

Private shareholders will be left with nothing of value after this, Clown will be taking preference shares and first call on the divis in perpetuity and the ordinary shares will be priced to reflect zero income and no chance of capital gain for a generation.

PasturesNew

Heyman wrote: »

Crikey.

How long before the money runs out?

It ran out 2 years ago... just everybody was so busy flashing the plastic, nobody noticed.

mewbie_2

So Mr. HBOS you want to borrow some money?
Er, yes please.
How much do you want?
Billions.
What's your income like?
Diddly squat.
Future prospects?
Similar.
That sounds fine. Now we just need to fill out some forms, keep those pests at the FSA happy.
...
There you go, billions sorted. What's that? A peerage as well? That may need to wait a year or two, just till the fuss dies down - those damn voters are a bit twitchy at present.
See you at the Xmas party.

lotto-dreamer

“Curiouser and curiouser!” Cried Alice (she was so much surprised, that for the moment she quite forgot how to speak good English)....

This is what Paul Mason's blog (Newsnight) says

..."Just hold that thought a minute. The current market value of HBOS is 6.7bn. If it is demanding up to 10 billion then why does the government not simply use 6.7bn to acquire the company?"...

"If the bankers will not volunteer to give an account of themselves, they must be compelled to do so before a public inquiry. It will take a forensic examination of how this crisis came about to design a regulatory system to prevent it being repeated. It will also take some show of contrition by bankers before public confidence and trust in the financial system can be restored."

http://www.bbc.co.uk/blogs/newsnight/paulmason/2008/10/backroom_battle_rages_what_do.html

WTF?_2

Heyman wrote: »

Crikey.

How long before the money runs out?

As I've always maintained - they'll just print as much as they need to make the books balance.

It's a stupid idea and will just make things worse further down the line but as the situation spirals deeper and deeper the pressure to inflate will be massive. No politician will be able to resist it.

GDB2222

!!!!!!? wrote: »

As I've always maintained - they'll just print as much as they need to make the books balance.

It's a stupid idea and will just make things worse further down the line but as the situation spirals deeper and deeper the pressure to inflate will be massive. No politician will be able to resist it.

Is it really that stupid? If the alternative is to suck all the good companies into the grinder with the bad ones ..... ?

Lehman's debt assets were auctioned off for less than 10% of face value, leaving $350 billion of payments due from the debt swap insurers - to be paid in 2 weeks. Who knows who has that liability, although obviously a good chunk was at AIG? What about their reinsurers?